Building Wealth Through Property

With low property prices and annual capital growth of nearly 30% - coupled with wonderful scenery, rapidly increasing tourism and a stable but dynamic economy - Bulgaria is a great place for sound property investments!

Please click on the relevant page to view the listing of the great opportunities we have for you there, or read on for an outlook for investment in Bulgaria and information on some of the key topics you will need to consider.

Ski Resorts:
• Bankso
• Pamporovo
• Borovets

Beach Resorts:
• North Coast
• Central Coast
• Southern Coast
• Ravadinovo (S Coast)

Village and City Resorts:
• Villages
• Cities

Where should I Buy?

With huge price appreciation, there are some great opportunities for property investors in Bulgaria, giving investors four principle choices. The holiday market on the Black Sea coat makes for great rentals during the summer season while visitors enjoy the Ski Resorts in both the winter and summer seasons – giving a longer rental period each year. City property presents a currently undervalued opportunity while there are many lovely village houses available at knock-down prices – you don’t have to pay the inflated (but still very modest) prices you see on the television programmes. The choice is yours and should be made to suit your investment plan.

To see a map of Bulgaria or search for particular locations, click here

Massive Tourism Growth

Bulgaria is blessed with some of the most stunning countryside in Europe – think Alps and Mediterranean coastline coupled with English greenery and French countryside! And fabulous but inexpensive cuisine to go with it – a great 3-course meal with wine comes in at less than £10! Bulgaria currently hosts some 5 million tourists each year and the Word Trade Organisation forecasts a four-fold increase by 2010! Alongside the Bulgarian Government’s commitment to the Tourism market (which accounts for some 12% of GDP), and the increasing political and economic stability, this should ensure that the demand for accommodation on the Bulgarian coast – and hence the potential for capital appreciation – remains strong for the foreseeable future. Similarly, the skiers of Europe are discovering the excellent pistes and great value to be had in the booming Ski resorts of Bansko, Pamporovo and Borovets.

Property Appreciation

The property market in Bulgaria continues to appreciate rapidly in 2005 and appears likely to repeat the recent average price increases of around 30% or more. Property prices in Bulgaria are currently some 40% below its EU neighbours and Bulgaria’s accession to the EU in 2007 is likely to increase demand for property – as experience in the other Countries joining the EU in April 2004 has shown – with resulting continued upward pressure on prices!

Investment Trends

The increasing affluence is likely to emphasise the current trends to higher quality and luxury developments. The Government and Municipalities are also learning from experience to date and are guiding development along more sustainable and controlled lines. So we at Compass Point are focused – as ever – on sourcing high quality developments from reputable developers – at the best prices in the market!

Where else can you buy property of this quality at these prices?

We set out below a brief guide to key elements of property purchase in Bulgaria.

Buying Property in Bulgaria

As arrangements for property purchase in Bulgaria are subject to changes, all information in presented here is for guidance only.

Whether you are buying off-plan or a re-sale property, you need to work out your budget and set the limit of your purchasing power – don’t consider properties out your price range. You should be in a position to complete the purchase before you make an offer – you need to be certain that you can raise the necessary finances.

As with property anywhere, remember – location, location, location!! Compass Point sources properties that are likely to be easily rentable and are expected to appreciate well – and we seek to give you the best advice based on your requirements and budget.

When you have identified the property you wish to purchase, you will need to pay a deposit of £2,000 to take the property off the market. Your deposit will be refunded if there are any problems with the property or developer.

Legal Advice

It is well worthwhile using good professionals to support you in Bulgaria - if the processes and paperwork are all correctly undertaken, buying property in Bulgaria is normally trouble free. We suggest you use a Lawyer who is familiar with Bulgarian law to handle the purchase and to ensure your interests are protected – we can recommend good English-speaking Lawyers if you wish.

If you do not wish to come to Bulgaria to sign the deeds, you can sign a Power of Attorney (PoA), to empower your Lawyer to sign contractual documents, and make legal submissions, on your behalf. A PoA can be executed while you are in Bulgaria or through a Lawyer or Notary Public in the UK.

Your Lawyer should check the sale & purchase contract to confirm all is correct. The freehold title deeds are presented before the Notary, showing ownership of the property. The Notary makes sure that the seller is legally entitled to sell and that there are no debts and, once the relevant taxes are paid, he will witnesses the signing of the new deeds by both the Vendor and Buyer and register the change of ownership.

Under Bulgarian law, all new properties must be guaranteed for 10 years, so you should have recourse, through your Lawyer, for any defects in the constructed building.

Bulgarian inheritance laws are different from those in the UK, so you should ensure that your Lawyer advises you the best options in this respect.

On re-sale of a property, Capital gains tax is payable by the seller (once the property has been registered). It is possible to sell before registration of an off-plan property without being liable for capital gains tax (although any profit is likely to be taxable as income). We would strongly recommend that you consult your Legal or tax adviser about buying and selling your property in Bulgaria.

Mortgages

Mortgages are available to UK and Irish Nationals (and some non-UK nationals) on a Repayment basis up to 70% of the value of the property in Bulgaria, subject to your status (non-status loans are currently not available). The interest rate for a Bulgarian mortgage is currently around 7.5%pa variable and the term can be up to 15 years (maximum age 70). A valuation Fee is usually payable to the Lender and there may be extra conveyancing charges if a mortgage is arranged – you should check the costs thoroughly before committing. As in the UK, for off-plan or new-build properties, funds are only available on completion, once the property has been legally registered in your name. You should note that, as mortgages can be up to 70% of valuation or purchase price, whichever is the lower, it is important that you only agree to sign the deed at the price you pay for the property. Proof of income is required in all cases.

Purchase Expenses

You need to allow for fees and taxes on both new and re-sale property:

• Registry search fees (to check legality and for debts)
• Stamp Duty (equivalent) – 2% at completion.
• Up to 20% purchase tax (VAT) on new properties and transfer tax on second-hand properties.
• Legal costs and Notary’s fees – normally about £500. The Lawyer’s fee should also cover arranging to connect up services (water, rates, etc.) in your name plus any help you need – residence, etc. The Notary is an independent professional whose job is to see that all contracts and deeds are correctly executed and also arranges a search before the deeds are signed.
• Document translation and legalization fees.
• Electricity and Water meters on new property.
• Fittings and Furnishings, if not included in the purchase price.

The rental market

If you are looking to rent out your property, you should focus on the holiday rental market or professional people in the cities. There is demand for property of all sizes, although the largest demand is for studios and one-bedroom apartments, as the preponderance of visitors to Bulgaria in the short-term are expected to want less expensive accommodation. Two-bed and three-bed apartments are in great demand in holiday complexes, particularly if they are associated with hotel facilities.

Rental yields may be better for properties in ski resorts than those on the coast, as the ski season is longer than the summer season (mid-December to mid-April), and there is also a summer season in the mountain resorts. The summer resorts such as Sunny Beach and Golden Sands close out of season, so holiday rental is limited to the Summer months. Yields are likely to be better for apartments in complexes than for resale properties, as there is more likely to be managed property letting from the apartment developments.

We do recommend that you contact appropriate rental agents in the area in which you are buying, to ensure that you understand the rent you can expect and all the expenses you will need to meet (such as letting agents’ fees, management fees, maintenance costs and annual taxes).

For property forming part of a complex, it is possible to rent through a Rental Agency or Tour operator, which will offer higher occupancy in the earlier years, although margins will be reduced. However, such contracts do not guarantee you rental, although it may be available for your own use if not well booked in advance.

All rental apartments should be fully furnished including towels and duvets and will need to be cleaned regularly to high standards. We recommend you get a professional company to do this for you.